Average pay falls back to February 2006 levels as jobs market holds steady

Published on Jobs, Skills and Pay


The latest fall in real pay means that average earnings are no higher than they were back in February 2006, the Resolution Foundation said (Wednesday) in response to today’s labour market figures.

Real earnings fell by -0.4 per cent in the three months to August. However, with the rate of inflation having increased since then the Resolution Foundation projects that the pay squeeze will deepen further in the Autumn to around -0.6 per cent. Workers look set to have to wait until 2018 for real pay rises to return.

The pay squeeze comes despite a strong jobs market. Unemployment and economic inactivity are both at 40 year lows, though employment has dipped slightly in the last two months.

Stephen Clarke, Economic Analyst at the Resolution Foundation, said:

“Today’s figures confirm the big picture trend that the UK labour market is great at creating jobs, but terrible at raising people’s pay.

“The scale of the pay squeeze over the last decade is so vast that people today are earning no more than they did back in February 2006, despite the economy being 4.4 per cent bigger per person since then.”